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Yuri Schmidt Press Statement on Khodorkovsky Charges

RA offers this translation of Yuri Schmidt’s press statement today. The original can be found in Russian here. schmidt.jpg “We are forced to turn to all people of good will with a request to demand that the Russian authorities cease violating Khodorkovsky’s rights” Press statement And so, M.B. Khodorkovsky and P.L. Lebedev have been charged again. This time around, as representative of the Procuracy-General of the RF M. Gridneva has declared, they are being charged “with theft of shares owned by the state, misappropriation of oil and legalization of funds received from the sale thereof”. From 1998 through 2003, they allegedly stole oil worth 850 billion rubles or, approximately 33 billion US dollars. In such a manner, when on 5 February 2007, having just managed to read the nearly 150 pages of text of the decree declaring Khodorkovsky an accused, we attempted to come up with a grand total by doing the sums by hand with the ten-digit numbers of “stolen” rubles, and then converting them into dollars, we lost nearly 10 billion! By the way, this unintentional mistake is more likely to the benefit of the defense, because according to the clarification made by the Procuracy-General, the charges look even more insane than they had seemed at first. It is not by accident that this time around, the procuracy has not only not published the bill of indictment on its site, it has even undertaken harsh measures to protect the “secrecy of the investigation”, figuring that it would be able to preserve its monopoly on informing the public by requiring defense counsel to sign statements of non-disclosure of the data of the preliminary investigation. However, it is not just we, but the procuracy too that has troubles with elementary mathematics (albeit with large numbers). In actuality, the procuracy has charged Khodorkovsky, Lebedev, and another ten YUKOS managers with theft by means of misappropriation (Art. 160 (3) CC RF) of 147,187,184,248 metric tons of crude oil in the period 1998-2000 from OAO «Samaraneftegas», OAO «Yuganskneftegas», and OAO «Tomskneft» VNK, with a total value of 492,486,604,892.92 rubles, and of 202,214,394 metric tons of crude oil in the period 2001-2003 from these same companies, with a total value of 811,549,054,000.00 rubles. By summing these numbers, we get a total value (in the procuracy’s opinion, naturally) of oil stolen in 1998-2003 of 1 trillion, 304 billion, 35 million, 658 thousand, 892 rubles and 92 kopeks. Excuse me, but this is 454 billion rubles more than in the official information from the procuracy. Perhaps the procuracy allowed this “error” in an attempt to preserve the secrecy of the investigation? In this statement, we are not setting ourselves the task of showing the complete groundlessness of the charges. This will be done later, and moreover with the involvement of the most authoritative specialists in the given sphere. At the same time, the public needs to know where these astronomical “theft” and “legalization” numbers come from, numbers that are not only several times greater than the company’s profits for the period indicated, but are also – as many observers have rightly pointed out – the planned costs of all the National Projects. They are likewise comparable with Russia’s annual budget at the beginning of the 2000s. These numbers have no relation whatsoever to the real state of affairs, and they have emerged as the result of several arithmetic operations carried out in the comfort of an office. The investigation has declared stolen all the crude oil produced by YUKOS’s upstream subsidiaries – OAO «Samaraneftegas», OAO «Yuganskneftegas», and OAO «Tomskneft» VNK – and has calculated its value (i.e. the value of the “theft”) at world market prices. What does it matter that far from all the crude was sold on the external market, inasmuch as the normatively established export quota comprise only 30% of production? It is all the same to the procuracy that a market as such did not exist inside the country, where the bulk of the “stolen” crude was sold, and that prices were significantly lower than world market prices. In actuality, there was no theft at all, even though the sale price to the end user within the country was higher than the so-called transfer price at which YUKOS acquired the crude from its production subsidiaries. The use of such prices was absolutely legal, based on the norms of civil and tax legislation. They were used – and continue to be used to this day – by all of Russia’s large oil companies, including the state-owned «Rosneft». We will not explain the specifics of price-formation mechanisms within vertically-integrated companies here. We will only note that all purchase and sale transactions were reflected in the reporting of both the “mother company” and the subsidiaries. Indeed, the reports were received by every shareholder, even minority shareholders, who knew about the true state of affairs in this way, and had the right to take legal action in commercial [arbitrazh] court in the event of disagreement with the sales price. As is known, in the first case of M.B. Khodorkovsky and P.L. Lebedev, the purchase by YUKOS of crude oil from subsidiary enterprises through the creation of companies in regions with preferential taxation and its sale at higher prices was not regarded by the investigation as theft. They discerned only tax evasion in these operations. So why then has the Procuracy-General now decided to select another route, having made a contrived charge of misappropriation? The answer is simple. First, the punishment for misappropriation (Art. 160 CC RF – up to 10 years of deprivation of liberty) is higher than for tax evasion (Art. 199 – up to 6 years). Second, (and this is the most important one), Article 199 of the CC RF precludes the possibility of a charge of legalization of criminal income (Art. 174-1 – up to 15 years), while Article 160 offers such an opportunity. As concerns the “theft of shares owned by the state”, we will say very briefly: what we have here is an attempt with improper means, inasmuch as in actuality, on the basis of decisions adopted at a high official level, the supposedly stolen VNK shares had been temporarily transferred to YUKOS under a bilateral transaction, and were returned to the state in 2001. There were no claims against YUKOS from the State Property Committee or the Russian Federal Property Fund. And inasmuch as there was no misappropriation, the charge of legalization falls away by itself. It is known that the Procuracy-General of the RF had intended to file the new charges back in June of 2005. However, apparently having weighed all the pros and cons, the power changed its mind at the last moment, understanding that the negative political consequences of a second case would be unjustifiably great. So what has forced it to change its previous decision today? We believe that there are several reasons for this. No doubt the possibility of the early release of the convicts on parole played its role – and in a year of elections to the State Duma no less. A possibility that had become particularly real when the court of the city of Krasnokamensk ruled one after another that three of the four reprimands that had been laid on Khodorkovsky had been unlawful. Of course, the power could have continued its attempts to make a malicious violator not eligible for early release out of him, but the groundlessness of the claims of the colony administration had become so obvious that 100 members of the European Parliament and the chancellor of Germany came out with an open protest against this. New charges and a new measure of restraint eliminate the problem of early release… But the main reason most likely continues to be that YUKOS – battered and eviscerated, although still possessed of no small measure of assets – has not only not stopped fighting, but has carried the struggle over to international judicial instances, where its chances of success are evaluated as sufficiently high. And the power is taking this very seriously. One after another, the necessary stages are being gone through on the way towards consideration of the applications of Khodorkovsky and Lebedev themselves in the European Court of Human Rights. So, the opening of a new case on new charges can easily be considered a counter-move by the power, and regarded as an attack for the purposes of defence, of holding on to “captured positions”. We have already declared on numerous occasions that the proceedings in the case have been moved to Chita – a city located 6500 km from Moscow – first and foremost in order to remove it from the control of the public and the press, to muffle public reaction in our country and abroad. It is plain that such a decision could not have been adopted on the initiative of either investigator Karimov or even Procurator-General Chaika himself. In the given situation, the procuracy – an organ called upon to implement oversight of compliance with legality – has carried out the unlawful directives of the Kremlin with a lackey’s zeal. Pursuant to Art. 152 of the CCP RF, a preliminary investigation shall be carried out at the place where the criminal act was committed. If several crimes have been committed, then the case shall be investigated at the place where the most severe of these was committed. The bill of indictment names Moscow as the place of commission of the crimes, including the most severe one – legalization of stolen funds. An exception is permitted from the general rule established by the CCP article mentioned above: an investigation may be carried out at the place where the accused is located “with the aim of ensuring fullness, objectivity, and compliance with procedural deadlines”. And so, in order to conduct a preliminary investigation not in the place where the criminal act was committed, two conditions must be met concurrently. At the same time, according to the sense of the norm, the “place where the accused is located” bust be some objective reality, and not an artificially created circumstance. In the given case, the “place where the accused is located” was determined completely arbitrarily, contrary to the sense of the law, in exactly the same was as previously, the place where they were to serve their sentences was determined contrary to the sense of the law. On 14.12.06, investigator Karimov issued – and Deputy Procurator-General V.Ya. Green sanctioned – a decree on the transfer of Khodorkovsky to the investigative isolator of the city of Chita from the city of Krasnokamensk, and of Lebedev from the settlement of Kharp of the Yamalo-Nenetsk Autonomous Okrug. They could just as easily have been transferred to Magadan, Yakutsk, Anadyr, or Petropavlovsk-Kamchatsky, with a subsequent declaration of any of these cities as the “place where the accused is located”, with all the consequences deriving therefrom. The preliminary investigation with respect to the present case has been conducted by an investigative group of the Procuracy-General of the RF since the year 2003 in Moscow. All procedural decisions were adopted, interrogations, searches, and seizures conducted, and expert studies appointed and carried out in Moscow. The decree declaring Khodorkovsky an accused was issued in Moscow as well. And although all the petitions and complaints in which the defense insisted on the conducting of investigative actions with the participation of Khodorkovsky in Moscow were denied, not a single document denied the fact that the investigation was being conducted in the city of Moscow. Not wanting to admit the true reasons for the transfer of Khodorkovsky and Lebedev to Chita, the investigation nakedly asserts that the transfer was carried out precisely “with the aim of ensuring fullness, objectivity, and compliance with procedural deadlines”. In actuality, this assertion is just as much a lie as the long-ago declaration by FSIN director Kalinin about how there were no free places at a single colony closer than Krasnokamensk at the moment Khodorkovsky was sent to serve his sentence. In Chita, there are no special (indeed, there are none at all) conditions to ensure the “fullness” of the investigation, inasmuch as there is absolutely no evidence whatsoever subject to being gathered with respect to the given criminal case in the given region. Nor is it clear what “objectivity” is ensured by conducting the investigation in Chita, and why such objectivity can not be ensured someplace closer. As concerns “compliance with procedural deadlines”, everything here is exactly the other way around. All the materials that the investigation has presented to Khodorkovsky in the investigative isolator of the city of Chita has been shipped in from Moscow. And the members of the investigative group themselves regularly come in from Moscow on assignment. Taking into consideration that the lawyers of the accuseds are likewise forced to fly a great distance, they can not react promptly to a change in the schedule of investigative actions or substitute for one another in the event of unforeseen circumstances. As a result, it is not always possible to conduct the investigative actions on the days they are planned. It is obvious that this not only does not promote “compliance with procedural deadlines”, quite the opposite – it places them under threat of disruption, which would have been precluded were the investigation being conducted in Moscow. On 3.02.07, investigator Karimov in Moscow issued two decrees: on declaring Khodorkovsky an accused and on the initiation of a petition on the selection of a measure of restraint in the form of detention. This petition was directed to the Ingodinsky Court of the city of Chita. On that same day, Deputy Procurator-General of the RF V.Ya. Green issued a decree on the determination of Chita as the place of the preliminary investigation. Until then, as is said above, the investigation was being carried out in Moscow, and only “investigative actions with Khodorkovsky and Lebedev” were being conducted in Chita. So why was it that in the fourth year of investigation, a decision was adopted on changing the place where it was being conducted? The answer is right on the surface. Pursuant to Art. 108 of the CCP RF, a petition on the selection of detention in the capacity of a measure of restraint shall be considered “at the place where the preliminary investigation is being carried out”, that is not in Moscow, as it had been until 03.02.07, but in Chita. In such a manner, yet another reason to permanently tether this case to Chita was created, artificially and completely arbitrarily. We have every reason to assume that the plans of Khodorkovsky’s persecutors are not limited to the conducting of just the preliminary investigation here. They clearly intend to hold the main trial itself in Chita as well. Or maybe even further away – in Krasnokamensk, where an investigative isolator is being erected with shock-worker tempos on the territory of correctional colony IK-10. This will signify the ultimate trampling on all the rights of accuseds guaranteed not only by the laws and international treaties of our country, but by the Constitution of Russia as well. The remarkable coordination of the actions of the Procuracy-General and the “independent” judiciary is worthy of note. At a time when the procuracy is grossly violating the rights of Khodorkovsky and Lebedev, completely ignoring the petitions and appeals of the defense, or substituting responses on the merits with motiveless runarounds, the Basmanny Court of the city of Moscow “loses” a complaint against the unlawful transfer of Khodorkovsky to Chita, which by law must be considered during the course of 5 days from the moment of submission. True, three weeks later it is “found”, but the sense of considering it has completely disappeared, inasmuch as the lost time has turned out to be just enough for the filing of new charges against Khodorkovsky and the consideration of a petition about the selection for him of a measure of restraint in the form of detention in a court of the city of Chita. The press has written much about how the consideration of the petition took place, how the blocks adjacent to the court were literally put under a state of siege, how snipers were stationed on the roofs of the buildings next to the court building. There was even one story on television about this. We would like to add to this picture with some unknown details. On 5 February, the investigation informed us that the court session for consideration of the petition on the selection of a measure of restraint would take place at 14:00 on 7 February in the investigative isolator. Naturally, the defense passed this information on to the press, commenting on the proposed consideration of the case in the SIZO as yet another violation of the rights of the accused. At 10:00 in the morning on 7 February, when one of the lawyers arrived at the Ingodinsky District Court in order to familiarize himself with materials presented by the investigation, the judge, in the simplicity of her soul, said that she didn’t know yet (!) where the session would be taking place, and asked that he phone her at one o’clock in the afternoon. At one o’clock she announced that she would be considering the case in the court building. It is absolutely appropriate here to ask who in fact had adopted the decision and reported to the independent judge where the case ought to be considered?! The conducting of the preliminary investigation – and quite likely the trial as well – in Chita has a minimum of one other purpose: the create additional difficulties for the accuseds in putting up a defense. (There is no sense in talking about the difficulties that this creates for the lawyers, although it is easy to imagine what sadistic pleasure our opponents experience from the fact that the lawyers, among whom are people who are no longer young and some who are not in the best of health, are being forced to waste time and effort on flights many hours in length and on adapting to the local time – six hours difference with Moscow – and to continue working after the end of the work day in hotel rooms, in conditions not adapted for this, in the absence of the necessary literature and office equipment). Considering the complexity and the scope of the case, we are forced to divide up spheres of responsibility. We need to consult with specialists and search for additional materials that do not exist in Chita, and for this reason were forced to establish a rotation timetable for our journeys. All of this reflects negatively on the rights of our client, who does not always have the opportunity to get the legal assistance he needs at a given moment. At the same time, we need to regularly inform the client and one another of the work we have done and to adopt joint decisions. We end up having to do all of this by telephone or with the use of electronic mail, which creates the opportunity for unlawful control on the part of interested parties. The further conducting of the preliminary investigation – and perhaps the trial as well – in Chita is fraught with an aggravation of the violations of our client’s rights. We are forced to turn to all people of good will with a request to demand that the Russian authorities cease violating Khodorkovsky’s rights and, first and foremost, transfer him to Moscow and conduct the process in compliance with all the norms of fair judicial proceedings. Lawyer Yu.M. Schmidt